Life is tough for the average South African at present, and you might be considering cancelling your car insurance. However, before you decide, make sure that you have carefully considered the pros and cons of doing so.
Auto & General knows life can sometimes hit you with a brick. However, before cancelling your insurance, you should know that other options may serve you better. This article tells you about the option of switching to a more affordable car insurance policy. This option can reduce the stress of paying high auto insurance premiums.
Reasons why people cancel car insurance
Cancelling your car insurance might seem to you like a way to handle life’s challenges right now. Still, please consider this thoroughly before making your decision. Times are tough and different people have various reasons for considering cancellation, which may include the following:
Financial hardship. South Africa faces many difficulties that could lead individuals to financial troubles. A case in point is the impact of electricity loadshedding on the economy. According to SME South Africa[1], loadshedding has devastating effects on the survival of small businesses, the biggest employer in the country. When small businesses close or reduce production, many people face additional hardships. This can force some to re-evaluate their monthly budget, including the decision to cancel their car insurance.
Misunderstandings about one’s policies. Some people may cancel their policies because they don’t understand some parts of them. For instance, they may not understand why their policy has two types of excess. Although this may sound like a non-issue, someone may misread it. It’s best to read and understand your policy before signing it. And if you have questions, contact a trained broker and ask for an explanation.
Reduced driving. There are many reasons for decreasing the number of kilometres you drive monthly. For instance, you may have decided to become a stay-at-home parent or to work from home. Perhaps you’ve recently retired and don’t use your car much anymore.. All these can decrease the amount of driving and potentially reduce your risk. Some people think that car insurance becomes an unnecessary expense. Some people choose to cancel car insurance regardless of the reason for reduced driving. However, reduced driving doesn’t eliminate road risks and hazards.
Lack of confidence in their insurer. Sometimes, you may have had a bad experience with your insurer. For instance, it may be because your claim was rejected for reasons you don’t understand. Your distrust is understandable, but it isn’t a valid reason to cancel your insurance.
Whatever reason makes you think about cancelling your vehicle insurance, think twice before doing so! Explore the next section to reacquaint yourself about car insurance's importance.
Reasons why car insurance is so important
You may cancel your vehicle insurance, but it’s essential to know what you are getting yourself into. Vehicle insurance can cover you for things you may not be able to sort out yourself. For instance:
Financial protection. Repairing a damaged vehicle can cost a lot of money. In nearly all cases, an accident-damaged vehicle will need a panel beater to repair dents. It can cost R1,000 to repair a small dent[3], while a large dent may set you back R3,500. To replace a whole panel, you may spend R2,500. These prices vary, depending on the car model and make, paint type and any hidden damage.
You can imagine how much you will have to pay if you need to fix your vehicle’s bonnet, front bumper, left and right front panels, lights and front suspension!
Without car insurance, you’ll have to pay from your pocket to repair your accident-damaged vehicle.
Liability protection. Car insurance helps when you have caused an accident or hit or damaged someone’s property. It’s easy to think that this won’t happen because you have never caused an accident in 20 years of driving. However, the unexpected does sometimes happen. Your car brakes may fail when you are a few metres behind another car, and you ram into it. Not only can this cause damage to your car but also the other driver’s vehicle. The other driver might hold you legally accountable for the damages and legal fees. When you have car insurance, you won’t have to worry about this because your insurer will pay for the damages. It’s even possible that the passenger might sue you for damages. For instance, if the injuries prevent them from continuing to work, they could sue you for loss of income. You’ll need to defend yourself in court, which can be expensive.
You enjoy peace of mind. One of the most stressful questions you can ever ask yourself starts with “What if...” You're constantly worrying about what might happen if you don’t have car insurance. Despite your excellent driving skills, some situations can be beyond your control. For instance, driving into an unexpected pothole can damage your vehicle. Simply knowing that you are financially protected, relaxes your mind and may even help you to drive better.
You have access to benefits, support and resources. Insurers like Auto & General not only provide cover for your vehicle, but they also provide much-needed support and resources during a difficult, stressful time. This is handy when your car suffers a mechanical or electrical breakdown in the middle of nowhere. Some benefits and support you can get include:
A supportive and knowledgeable claims department. The last thing you want after an accident or breakdown is added stress. A supportive claims department can help you ensure your vehicle is safe and patiently guide you through the claims process.
Car hire if stranded hundreds of kilometres from home
Towing in case your vehicle suffers a mechanical or electrical breakdown
Free vehicle storage for up to three days after being towed
There are many more benefits: you can see a full list on your policy.
Don’t cancel car insurance - try this instead
There are alternatives to cancelling your car insurance or resorting to buying cheap car insurance from a disreputable insurer. For instance:
Downgrade your cover. If you are on comprehensive vehicle cover, you can downgrade to a lower tier cover such as third-party, fire and theft auto insurance. This cover protects you if your vehicle gets stolen or you accidentally damage someone’s property. Doing so will decrease your premiums to manageable rates. This can be a good decision if your lifestyle changes or you drive less.
Increase your excess. Basic excess is the amount you must pay before your insurer pays out. The lower the excess amount, the higher the premium you pay. This means if you increase the excess amount, your vehicle insurance rates will be lowered. However, remember that you will face an increased financial burden when claiming. It’s best to create an emergency fund to help when making claims.
Downgrading to a market value cover. Many car owners are unsure about the difference between retail value, market value and trade value. The retail value of a vehicle is what you pay at a car dealership and tends to be close to its replacement value. Insuring your car for this value attracts a higher premium and payout. In contrast, trade value is what a car dealer pays for your vehicle. Insuring your vehicle for this amount results in lower premiums. For the lowest premiums, insure your vehicle for its market value. This amount is around the average value of the retail and trade values but takes into account your car’s age, condition and the market.
Whatever option you choose from among the above, you will be in a much better position than outright cancelling your vehicle insurance. When things improve, you can upgrade without worrying about starting from scratch.
Get a car insurance quote from Auto & General
Not having insurance exposes you to risks that can seriously hurt your pocket. You can avoid this by getting the right amount of car cover. Browse the full portfolio of car insurance products with Auto & General, or contact expert team and request a free and no-obligation online car insurance quote now. You’ll be glad you did.
